Correlation Between NASDAQ TEST and Xcel Energy

Can any of the company-specific risk be diversified away by investing in both NASDAQ TEST and Xcel Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NASDAQ TEST and Xcel Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NASDAQ TEST STOCK and Xcel Energy, you can compare the effects of market volatilities on NASDAQ TEST and Xcel Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NASDAQ TEST with a short position of Xcel Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NASDAQ TEST and Xcel Energy.

Diversification Opportunities for NASDAQ TEST and Xcel Energy

0.47

Correlation Coefficient

NASDAQ TEST  Xcel Energy

Very weak diversification

The 3 months correlation between NASDAQ and Xcel is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NASDAQ TEST STOCK and Xcel Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Energy and NASDAQ TEST is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NASDAQ TEST STOCK are associated (or correlated) with Xcel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Energy has no effect on the direction of NASDAQ TEST i.e., NASDAQ TEST and Xcel Energy go up and down completely randomly.

Pair Corralation between NASDAQ TEST and Xcel Energy

Assuming the 90 days horizon NASDAQ TEST STOCK is expected to generate 8.96 times more return on investment than Xcel Energy. However, NASDAQ TEST is 8.96 times more volatile than Xcel Energy. It trades about 0.01 of its potential returns per unit of risk. Xcel Energy is currently generating about 0.07 per unit of risk. If you would invest  2,483  in NASDAQ TEST STOCK on May 6, 2025 and sell it today you would lose (620.00) from holding NASDAQ TEST STOCK or give up 24.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	84.13%
Values	Daily Returns

NASDAQ TEST STOCK  vs.  Xcel Energy

NASDAQ TEST STOCK

Risk-Adjusted Performance

Very Weak

Over the last 90 days NASDAQ TEST STOCK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NASDAQ TEST is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Xcel Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xcel Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Xcel Energy is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with NASDAQ TEST and Xcel Energy

The main advantage of trading using opposite NASDAQ TEST and Xcel Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NASDAQ TEST position performs unexpectedly, Xcel Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Xcel Energy will offset losses from the drop in Xcel Energy's long position.

The idea behind NASDAQ TEST STOCK and Xcel Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..